From 1 July 2018, taxpayers are as stated earlier obliged to provide within 24 hours invoice data for domestic transactions with a minimum VAT amount of 100,000 HUF (322 EUR).

Although we offer a fully SAP-integrated solution in SAP itself to submit required data in an automated way, it is essential to review whether the data in SAP itself is correct and complete.

The Key Group has recently delivered its Hungarian SAP health check pilot for one of its major clients, and the outcome was that quite some changes in SAP had to be made to avoid either future questions by the tax authorities or announcement of a tax audit when data is submitted mid-2018.

Please keep in mind that the Hungarian tax authorities are aware that SAP setup itself is often not in order and that tools outside the ERP system are used to remediate and manipulate tax data outside of SAP with the purpose to improve tax reporting.

The full automated legal requirement is to force taxpayers to remediate the ERP VAT setup itself and realize that taxpayers do not use workarounds as Excel sheets or similar tools outside the ERP system as human intervention is not allowed.

When the definitive EU VAT system becomes in force – expected in 2021 – these data requests become even more critical.

The local tax authorities will use the acquired tax data to check whether sufficient tax revenue is received from the other Member State(s).

Based on this pilot we have designed an efficient and effective assessment process that will include not only an overview of gaps but as well our view how to remediate these gaps in SAP itself.

The Key Group offers an SAP health check specifically on the Hungarian legal requirements defined in XML format.

From 1 July 2018, taxpayers are as stated earlier obliged to provide within 24 hours invoice data for domestic transactions with a minimum VAT amount of HUF 100,000 (322 EUR).

The ERP system must be able to detect sales invoices meeting reporting requirements: the minimum VAT amount. To be able to comply with the requirements and provide the data on in time, a taxpayer needs to develop either tooling or purchase a solution.

When invoicing takes place using an accounting/billing program, the invoice information has to be transmitted immediately from the billing program to the National Tax and Customs portal (NAV) without human intervention, via public internet, shortly after the invoice has been issued.

Taxpayers who do not send the data online immediately will be subject to tax penalties. The fundamental principle of the data supply is that an XML data file may contain only one invoice.

If for technical reasons, the billing program sends multiple invoice data to the tax office at a time; it cannot do so in a single data file. Breaking the accounts into separate data files is necessary.

According to the Commission’s proposals, VAT will now be charged on cross-border trade between businesses. Currently, this type of trade is exempt from VAT, providing an easy loophole for unscrupulous companies to collect VAT and then vanish without remitting the money to the government.It will be simpler for companies that sell cross-border to deal with their VAT obligations thanks to a ‘One Stop Shop’ (OSS).

Traders will be able to make declarations and payments using a single online portal in their own language and according to the same rules and administrative templates as in their home country. Member States will then pay the VAT to each other directly, as is already the case for all sales of e-services.The Commission also proposes a move to the principle of ‘destination’ whereby the final amount of VAT is always paid to the Member State of the final consumer and charged at the rate of that Member State.

The Governments of the Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Qatar (status unknown due to GCC politics/friction), Saudi Arabia and the United Arab Emirates that make up GCC – are committed to form a common framework for the introduction of value added tax (VAT) in the region. In order to achieve conformity within the GCC, it is anticipated that the six member states will all aim for implementation of VAT during the period commencing 1 January 2018 or by the end of 2018.

VAT as a process will affect many aspects of businesses operating in the GCC and will require significant time to plan, and integrate into existing processes. The objectives:

To be ready in time and a need of an effective and efficient work process between Tax function, IT function and its third party consultants

To optimize its VAT deduction and to automate this VAT process as much as possible in SAP

Based on above objectives the PDF document ‘More detailed description of Work in booklet’ [see link below] established the scope, schedule and means of initiating the work to be performed by the service provider and describes or references the specifications, instructions, standards, and other documents, which the service provider shall satisfy or adhere to in the performance of the work.

The KEY Group is supporting one of the largest multinationals with the setup of the GCC VAT rules in SAP itself

Istanbul, Turkey and Amsterdam, the Netherlands— SNI and Key Group announce for 50 multinationals a successful Spanish SII filing

The Spanish SII filing, a new requirement introduced by the Spanish government, requires taxpayers to submit VAT relevant transactional data of their Accounts Payable (AP) and Accounts Receivable (AR) records in a specific XML format close to real-time to the Spanish tax authorities (AEAT). To support these new regulations our clients have implemented our SAP add-on for Spain.

That is a SAP integrated solution for Spain with a cockpit to select reportable outgoing and incoming invoices, create periodic SII files (envelopes), E-submission of SII XML files and control reports. The creation and submission of the SII reports could be fully automated in SAP Batch jobs. It is however also possible to do some SII reports (for example the sales invoices) fully automated and other SII reports (for example the incoming invoices) manually.

We are pleased to announce that our first actual SII VAT filing submission were completed successfully prior to first submission deadline.

A partnership is closed between the Key Group, SNI and the international operating SAP consultancy firm ‘ConVista Consulting’ with offices amongst others in Madrid and Barcelona. Key Group and SNI operate from Netherlands, Poland and Turkey.

Who we are

In order to establish synergies to support business SAP challenges of our clients we have setup a joint venture initiative in the past. Tax SAP experts – KEY Group and Phenix Consulting – developing together with SNI a global development partner of SAP and leading software company in the area of e-invoice, e-bookkeeping, e-archive, e-ticket.

SNI’s core business is to provide SAP certified add-ons for legal compliance to a large number of global well-known companies. We have therefore access in-house to senior Tax SAP experts working together with SAP experts (functional and technical). That means our turnaround time is fast and our quality is very high.

A partnership is closed with the international operating SAP consultancy firm ‘ConVista Consulting’ with offices amongst others in Madrid and Barcelona. Our partnership relates to distribution, implementation and maintenance support (Spanish language) for our SAP SII add-on solution for Spain.

ConVista is an experienced consulting firm with a large track record in the design and installation of financials & treasury applications with SAP. We offer comprehensive IT consulting services complemented by custom software development. ConVista provides a complete service offering from a single source. Streamlined processes, a higher degree of automation and shorter project durations serve as indicators for improved efficiency. Expertise in process, technology and methodology form the fundamental components of our work. We combine long-lasting experience in the implementation and delivery of large programs with in-depth knowledge of treasury applications from SAP.

The term materiality has many meanings and definitions. Boundaries of materiality are primarily determined based on personal estimations. This can be estimations by auditors, risk management departments, company directors, etc.

The term materiality, used as a quantitative norm, then serves as an approval boundary. Evidently, the materiality used to determine the tax risk appetite of businesses is significantly lower than the materiality used by the external auditor in the annual audit.

The external auditor’s task is only to provide an opinion whether the annual accounts provide a true and fair representation of the company’s affairs. He or she is not asked to provide a statement regarding the accuracy or the acceptability of the submitted return for corporate tax, income tax, VAT etc.

The examples of tax situations listed below should, however, also receive full attention from auditors. These stock market listed companies have after all, been obliged based on the SEC rules to report their risks to their investors:

Google avoided €227 million in taxes in Italy. Google paid £130 million to the British tax authorities and agreed to pay higher taxes in the future. In France, the tax authorities demanded €1.6 billion from Google.

Apple paid €318 million as a settlement to the Italian tax authorities after a two-year fraud investigation. Apple missed a deadline to pay €13 million in taxes to Irish authorities in the context of state aid. Due to the special treatment given by the Irish government, the effective tax rate was just 0,05%.

Facebook (FB, Tech30) disclosed that the IRS conducted an investigation into the way it moved assets to an Irish subsidiary to avoid higher taxes. According to Facebook’s SEC filing, the amount totals $3 – $5 billion, plus interest.

Coca-Cola was found to to owe the US tax authorities $3.3 billion, plus interest, based on an audit by the IRS. Profits were incorrectly recognized in foreign countries, rather than the US.

In case these tax-related issues are considered individually per county and per company, it could be put into question whether these matters are also material for the auditor. Notably, the media also discuss the reputation of these companies. Any potential reputational damage and/or fiscal uncertainty might impact not only the share price but also external relations including that with the tax authorities.

The loss of tax income due to the movement of assets to low tax rate jurisdictions is conservatively estimated to total between $100 and $240 billion.

The amount of media attention, public indignation and political reactions these cases have received – including for instance that of US senator and (former) presidential candidate Bernie Saunders – emphasize the differences in tax morality. Why should ordinary citizens comply with tax obligations, while multinationals or soccer players are attempting to avoid paying a ‘fair share’ of taxes by means of tax-saving structures? Both media and politics have given a great deal of attention to cases such as the ‘Panama Papers’, ‘Lux Leaks’, ‘The Netherlands Tax Haven’ and ‘Football Leaks’.

In the context of an investigation regarding state aid, the European Commission states that providing tax rulings (advance pricing agreements; APA’s) should not result in situations in which some taxpayers pay less than other taxpayers under the same circumstances.

As a result of the Panama Papers, many Corporate Service Providers, shell corporations and advisors are interrogated by the Dutch parliament with regard to tax avoidance and tax evasion. These are companies without any significant assets or activities in the Netherlands that solely serve as a vehicle for shifting interest and royalties within international companies. Due to the application of tax treaties, this construction results in a significantly lower corporate taxes.

During his presidential campaign in 2008 Barack Obama illustrated the issue:

“There’s a building in the Cayman Islands that houses supposedly 12,000 U.S.-based corporations. That’s either the biggest building in the world or the biggest tax scam in the world, and we know which one it is.”

Evidently, we’ve entered a broader discussion, reaching beyond the question of what is tenable based on fiscal laws and regulations. Beside financial risks – that can be material – it concerns reputational damage, which can, as previously mentioned, negatively affect share prices.

Business operations can thus be fiscally appropriate, complying with tax laws and regulations, yet deemed unacceptable according to societal norms. This is a relatively new phenomenon in terms of reputational risks that affects the risk management from the overarching ‘business control framework’.

Questions that need to be asked include for instance: does the current business model still fit the ‘reconsidered’ business strategy?

In terms of tax revenues, a global trend is emerging shifting from direct to indirect taxes. The rates for VAT are increasing, whereas the rates for corporate tax are decreasing. An average multinational has over €5 billion in indirect tax flowing through the business. A mistake of one percent can make the difference between profit or loss. This is material, also for an auditor.

From 1 July 2018, taxpayers are as stated earlier obliged to provide within 24 hours invoice data for domestic transactions with a minimum VAT amount of 100,000 HUF (322 EUR).Although we offer a fully SAP-integrated solution in SAP itself to submit required data in an automated way, it is essential to review whether the data in SAP itself is correct and comp […]

From 1 July 2018, taxpayers are as stated earlier obliged to provide within 24 hours invoice data for domestic transactions with a minimum VAT amount of HUF 100,000 (322 EUR). The ERP system must be able to detect sales invoices meeting reporting requirements: the minimum VAT amount. To be able to comply with the requirements and provide the data on in time, […]

To speed up the joint processing and analysis of data within Eurofisc, the Commission is currently developing TNA software for voluntary use by the Member States as of 2018.In order to maximise TNA’s potential to identify fraudulent networks across the whole EU, Regulation (EU) No 904/2010 would make clearer provision for the joint processing and analysis of […]

According to the Commission's proposals, VAT will now be charged on cross-border trade between businesses. Currently, this type of trade is exempt from VAT, providing an easy loophole for unscrupulous companies to collect VAT and then vanish without remitting the money to the government.It will be simpler for companies that sell cross-border to deal wi […]

The fierce debate on a fair distribution of tax revenues by governments has reached new heights. Tax shift due to risk allocation of transactions to low tax rate countries and even globalization itself are under political discussion.Protectionism is an important part of the strategic objectives of certain governments. Additionally, the discussion concerning […]

Tax authorities are besides optimizing traditional tax reporting systems increasingly implementing in addition electronic (almost) 'real-time' transaction reporting systems. It is expected that tax authorities due to technological innovations become increasingly better and faster in executing their tax audit.Complementary to the existing and more t […]

The critical conditions for successThe importance of indirect tax has increased over the last couple of years. While the rates for direct tax, corporate income tax, are decreasing, the rates for indirect tax keep rising. At multinational companies we’re easily talking about amounts of over 5 billion euros of indirect tax flowing through the books.According t […]

The Governments of the Gulf Cooperation Council (GCC) - Bahrain, Kuwait, Oman, Qatar (status unknown due to GCC politics/friction), Saudi Arabia and the United Arab Emirates that make up GCC - are committed to form a common framework for the introduction of value added tax (VAT) in the region. In order to achieve conformity within the GCC, it is anticipated […]

SNI SAP-ZUGFERD is a SAP certified SAP add-on enabling electronic invoice exchange including structured data in an efficient way. ZUGFeRD is an abbreviate for »Zentraler User Guide des Forum elektronische Rechnung Deutschland«. It is a new invoicing standard that will play a major role in efficient and effective electronic invoicing. ZUGFeRD invoices carry b […]

Many countries nowadays implement the BEPS recommendations such as the ‘master’ and ‘local’ file and the ‘Country-by-Country’ report. In general, this not only leads to an aggravation of Transfer Pricing (hereafter: TP) compliance activities, but also results in the potential discovery of errors that were previously undetectable. Indeed, TP processes are gen […]

In an increasing number of countries, laws and regulations are established that force companies to be transparent with regard to their handling of tax risks, (fiscal) risk management, risk appetite – also in relation to tax planning – and the way of dealing with tax authorities.This concerns the actual fiscal management, including the way in which the compan […]

A partnership is closed between the Key Group, SNI and the international operating SAP consultancy firm 'ConVista Consulting' with offices amongst others in Madrid and Barcelona. Key Group and SNI operate from Netherlands, Poland and Turkey.Who we areIn order to establish synergies to support business SAP challenges of our clients we have setup a j […]

The term materiality has many meanings and definitions. Boundaries of materiality are primarily determined based on personal estimations. This can be estimations by auditors, risk management departments, company directors, etc.The term materiality, used as a quantitative norm, then serves as an approval boundary. Evidently, the materiality used to determine […]

Tax moral is shifting. More often what is (still) legally allowed may not automatically be accepted by the public opinion. Reputational damage is imminent.Both on direct and indirect taxation the tax authorities have set their priorities. The tax authorities not only want to receive more tax data, but also faster and more often. In addition, there is a tende […]

We offer a new SAP add-on solution that creates automatically the VAT Smartform from SAP. When our SAF-T SAP add-on solution has been purchased this additional functionality will be managed under SAF-T cockpit as a different report.Companies selling across European Union borders have to submit EC Sales List (ESL). This should contain the details of sales or […]

In Spain a new VAT reporting system will enter into force on the 1st of July 2017. The new Spanish requirements will have a huge impact on many (multi)nationals that run SAP. SAP add on for SIIThe SAP add-on is based on the selection of the VAT relevant transactions from the SAP ledgers. This can be done manually with a new SAP transaction or in an automated […]

Richard Cornelisse

I advise multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework. I started my career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently I am a senior managing director of Phenix Consulting.
I have over 20 years’ experience advising clients on international VAT issues. I am specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work.
I am also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact me.